Issue 237 | 13 July 2020 - Turner & Townsend alinea

Economic Week In Review | Issue 237 | 13 July 2020

Summer Statement

In his ‘mini Budget’ the Chancellor announced a raft of new measures to support jobs and help the economy. Proposals includes an ‘Eat out to help out’ scheme, VAT reductions on staycations, a Job Retention Bonus, and apprenticeship bonuses. Specifically for the construction market, the Stamp Duty threshold is to be temporarily lifted to £500,000 until April 2021, as well as various schemes for energy efficient improvements to domestic and public buildings.

UK news

Retail job losses | Several retailers announced job cuts and business restructuring as consumer spending remains depressed. Data covering ‘Super Saturday’ (the reopening of the hospitality sector) will not be available until September.
No Deal would cause the cost of household staples such as meat, cheese and oranges to increase, according to the British Retail Consortium. Almost half of food consumed in restaurants or shops is bought from the block, as well as 30% of supermarket produce.

Global news

Reclaiming Airbnb | A plan to tackle affordable housing problems has been launched in Lisbon. Landlords who previously catered for tourists are who
are now concerned about properties laying vacant can rent them to the city for a minimum term of five years. Owners will receive a lower income but the scheme reduces risk and exempts them from property and capital gains taxes.
Tokyo vacancy rates for offices increased slightly from 1.64% in May to 1.97%, the largest monthly increase in more than ten years. Vacancies in Tokyo have been sliding for the last seven years but have been on the rise for the last four months.

Materials and commodities

Oil | The International Energy Agency has increased its forecast for demand in 2020 but warned that Covid-19 remains a risk to the outlook. Demand fell less than expected in the second quarter, which was anticipated to be the most affected quarter.
US shale bail out | The US shale industry is to receive over $2.4bn in loans under the Paycheck Protection Program. The industry was struggling before the pandemic, partly as a consequence of the Oil Price War, and the number of active rigs has fallen over 69% this year.
Post Brexit Customs | Work is to start on a 27-acre Brexit customs clearance centre in Ashford, near Dover as part of a £750m package for new Brexit Border infrastructure. The Department of Transport says it will be used to hold delayed HGVs at the end of the transition period as well as for customs checks.

Construction and property news

Housebuilding productivity | After large scale shutdowns and poor productivity reports, housebuilders have confirmed that productivity is returning to normal with some commenting that increased availability of subcontractors has enabled “normal levels of production”.
Trade Balance | One of the Construction 2025’s primary strategies was to halve the UK’s construction balance of trade deficit, but the latest data from ONS shows that it has grown from £6bn in 2013 to £10bn last year.

Friday to Friday

	Price / Index	Week % change	Annual % change
FTSE 100	6,095.41	-1.01	-18.79
FTSE 250	17,179.97	-0.71	-12.13
Nikkei	22,677.25	1.66	4.57
CSI 300	4,753.13	7.55	24.80
S&P 500	3,185.04	1.76	5.68
Nasdaq	10,617.44	4.01	28.79
CAC 40	4,970.48	-0.73	-10.81
Dax	12,633.71	0.84	2.52
$ per £	1.2652	1.50	0.77
€ per £	1.1180	0.85	0.23
Gold £/oz	1,424.89	0.47	26.55
Brent Oil $/barrel	43.24	1.03	-35.19

Weekly Summary

Stock markets have been climbing recently, encouraged by the progressive reopening of economies and a pathway to recovery, with China’s CSI 300 leaping 7% in the week. America’s markets grew despite rapidly increasing cases and increased tensions with China.

The Chancellor’s Summer Statement brought new spending commitments, that will no doubt be welcomed, but the concern about debt increases as the Institute for Fiscal Studies warns that the deficit could hit £350bn this year, which would double the previous record set in 2009.

Many are now turning their attention back to Brexit, with the Institute of Directors revealing that only a quarter of UK firms are ready for Brexit. In construction, access to labour and materials are key points of focus, especially in light of the UK’s growing trade deficit.